By KRISTEN MILLARES BOLT, SEATTLE POST-INTELLIGENCER REPORTER

Published 9:00 pm, Monday, March 28, 2005

Sally Jewell has a garage stuffed so full of outdoor equipment that she can't get a car into it.

The newly minted chief executive of Recreational Equipment Inc. likes to bike, kayak and climb mountains, like so many Seattleites who roam Washington with roof racks.

And after 19 years in commercial banking, culminating as the chief executive of Washington Mutual's Commercial Banking Group, she can finally feel comfortable being the kind of person who likes to ride her bike to work.

"I used to have to hide my biking commute," said Jewell, 49. "In summertime, I would ride to work with my clothes rolled up in my bag, shower at the Washington Athletic Club, and walk to work."

Now, though, she can flaunt her enthusiasm for "sweat equity," as she calls it, without fear of recrimination.

"Sally is an impact player," said REI's former Chief Executive Dennis Madsen, just before he oversaw his last annual shareholder's meeting last night. "When you are in banking for that long, you see hundreds of examples of the good companies and the bad, and she brought all that wealth of experience with her."

Jewell was instrumental, said Madsen, in recrafting the Kent-based consumer cooperative's focus on its brand name as well as helping the company recover from the misfire of its expansion into Japan.

"Here at REI, we can take a long-term view, which is completely different from all the other companies that are public and therefore beholden to stockholders," said Jewell, who began her commercial banking career as an engineer/adviser for Rainier Bank, shortly after scouting oil fields for Mobil Oil Corp. as a newlywed with her husband, Warren Jewell. "Our stockholders are our customers."

Those customers keep coming -- REI now has nearly 2.5 million active members, a far cry from the days when Jewell's father first signed up in 1959. Last year alone, 450,000 new members paid their $15 membership fee and received a 10 percent rebate on their purchases as part of REI's annual dividend.

Even factoring in the rebate, the company posted a 32.4 percent jump in its net income, reaching $25.3 million last year from $19.1 million in 2003.

The 77-store company reported $887.8 million in sales last year, from its stores, its Web sites (rei.com and rei-outlet.com), and its travel business, REI Adventures.

Part of that success can no doubt be attributed to Jewell, who joined its board in 1996 and left Washington Mutual to became REI's chief operating officer in 2000, the year that the company posted its first annual loss, at $11.4 million.

Since then, Jewell helped rally the company around a streamlined strategy focused on its domestic retail stores as well as integrating its Web site with its brick-and-mortar services.

"She's got the right personal attributes, personality, and a warm and embracing communications style," said Madsen, who is leaving REI to found the Youth Outdoors Legacy Fund, which will give grants to organizations dedicated to taking children out into nature.

"Plus," he said, "the team around her had been deeply imbedded in the REI culture -- three of four board members are nearly 20-year veterans."

That "REI DNA," as Madsen describes it, will help her guide the company as it grapples with the problems it has faced for the past 20 years: managing its growth.

"I don't think it feels like a big box store -- our people have a real passion for the outdoors and a depth of knowledge about the local opportunities that sets them apart," said Jewell, who added that the company's focus is on slow, intelligent national expansion, set at eight new stores for next year. "We are not going to try to grow at a crazy pace, but rather pick places where we have opportunities."

Under Jewell's guidance to make fewer and better choices, REI began to pull its name off products such as carabiners and ice axes, which Madsen said, "we had no business putting our label on in the first place."

Her brand strategy also increased the volume of the fewer REI-branded items sold by the company, which helped REI's in-house label grow 12 percent in 2004 -- more than 14 percent faster than the company's over-all 10.5 percent increase.

The company's strategy, though, reaches past brand realignment to extend into building communities around outdoor activities.

Though 85 percent of the company's sales are to its members, it also uses targeted campaigns, like its latest cycling catalog, to recruit new enthusiasts to fill its stores.

And the company is still trying to figure out how to use the buying pattern information it accumulates for each member.

"We're very cautious about that because we don't want to intrude on people's privacy," said Jewell.

"Still, it can help us narrow our outreach, because someone's gold is someone else's spam."

And as far as the competition is concerned, including local brands such as Cascade Designs Inc. and Ex Officio, Jewell simply said, "We're their largest customers."